Australian Energy Market Operator

AEMO operates Australia's National Electricity Market (NEM), the interconnected power system in Australia’s eastern and south-eastern seaboard, and the Wholesale Electricity Market (WEM) and power system in Western Australia.

AEMO operates gas retail markets in New South Wales and the Australian Capital Territory, Queensland, South Australia, Victoria, and Western Australia. AEMO also operates wholesale gas markets in south-eastern Australia, those being the Declared Wholesale Gas Market in Victoria (DWGM), the Short Term Trading Market in Adelaide, Brisbane and Sydney (STTM), and the Gas Supply Hub (GSH), whose trading locations are based at Wallumbilla in Queensland, and Moomba in South Australia. AEMO also operates the Natural Gas Services Bulletin Board (GBB), and is system operator of the Victorian Gas Declared Transmission System. AEMO is also responsible for Gas Services Information functions in Western Australia.

A series of planned and unplanned generation outages over the last few days has resulted in Lack of Reserve (LOR) conditions in the NSW region. However, these conditions did not result in any involuntary load shedding in NSW.

There were no transmission outages that impacted events in NSW over the evening peak.

In total, around 3800MW of generation resources expected to be available across the peak was not available in NSW. While a number of generating units in NSW were out of service due to planned maintenance, this had no impact on reserve conditions. A further two unplanned forced outages however did result in 1320MW dropping out of the market and resulted in tighter reserve levels.

The average peak demand for NSW in June is approximately 10,550MW. Three days of the week recorded above average demand with Tuesday (5th) and Wednesday (6th) recording 10,938MW and 11,029MW respectively and Friday (8th) recorded a peak demand of 10,706MW.

Some factors influencing demand figures during this past week included a thick cloud cover and rain limiting rooftop solar and reducing the output of this generation resource by between 115MW to 254MW on any given day.

The energy system is undergoing unprecedented transformation. With the recent exit of almost 5,000 megawatts (MW) of generation in the last decade, Australia does not have the energy reserves it once had to lean on in times of need.

The need to ensure a reliable portfolio of resources underscore AEMO’s concerns about the impact of the Liddell retirement and our support for the complimentary emission and reliability components embodied in the National Energy Guarantee.

As market and system operator, last week’s events in NSW are a sobering reminder that even outside of the traditional summer peak periods, there is still a need to ensure adequate resources are available to manage the system.

A combined market and regulatory approach that allows participants to compete to invest in a variety of resources will address reserve or reliability deficits supported by transmission investments that optimize the use of these resources for reliability and costs and produce the best overall outcome for consumers.

Resources can include new supply, demand-based resources, efficiency gains and the necessary transmission investment that increases import capability and better utilises resources in all regions.

Ideally, an agreed National Energy Guarantee will serve as a market mechanism to support investment gaps in the resource mix. AEMO’s soon to be published Integrated System Plan will also recognise that the challenges in the system will become even more complex as more of our aging coal units retire and the costs of renewable resources both on and off the grid continue to drop.

These initiatives, in addition to a revision of our reliability and reserve standards and accompanying market design and rule changes that more accurately pay for essential grid reliability and security services, are all under review and development.

Many and varied opportunities will present themselves for Australian consumers as we look forward to working with the Commonwealth and States, and in coordination with the ESB, the Market Bodies and our members and stakeholders to gain positive resolution over the course of this year.

For more information: AEMO Media I Mobile: 0409 382 121 I Email: media@aemo.com.au I